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Practical Magic

Meet the startup keeping big-box returns out of landfills

Retailers are reducing waste, but less so when handling billions of returned goods. Optoro aims to rethink and reduce the impacts.

American consumers are fickle creatures, sending back up to 10 percent of what they buy from merchants every year. That’s roughly 3.5 billion items. The exposure is even bigger for e-commerce sites at up to 15 percent, according to some metrics.

This is an enormous cost of business for retailers. Plus, it can take months for unwanted or damaged gadgets, apparel and other products to find a new home or (worse) to make their way into landfills.

The founders of software startup Optoro think they can make this process far more efficient. 

“I was impressed by the commitments retailers have made for the past few years in energy efficiency, disposal, other areas,” said Tobin Moore, co-founder and CEO, whose previous experience includes eSpot, one of the first drop-off businesses inspired by eBay. “What retailers are doing with returns and excess inventory, however, were not in this picture.”   

Optoro’s business intelligence and data analytics software automates reverse logistics, helping retailers find potential buyers for unwanted or excess items more quickly. It also cuts out many touchpoints along the way: sometimes up to five “middlemen” might be involved in picking up returns, assessing the value and transporting goods to a place where they can be resold. Streamlining the process reduces the potential for damage and minimizes the environmental impact of transporting things from one place to another, Moore said.

The company has created two services: OptiTurn, software for managing and remarketing "open box" returns and excess inventory on sites such as Amazon and eBay; and blinq, an e-commerce platform where goods are sold at discounts. The latter services uses predictive analytics to adjust prices dynamically, using data from other e-commerce sites. 

“We take the product from the source and connect it to all the people that want to buy,” Moore said. The amount of time it takes to resell the item can be cut to several weeks or (sometimes) to a few hours, he estimated.

Optoro’s executive team won’t reveal customer names, but the startup is working with about 40 manufacturers and retail companies to process returns, including “one of the biggest home and garden retailers and one of the biggest office retail chains.”

The company employs more than 100 people and has offices in Washington, D.C., and Maryland. It works with retailers’ existing distribution hubs to rethink the returns process, often working on a pilot first to test approaches. “Our model is to leverage what’s in place already; we try to be asset light,” Moore said.

Optoro closed a Series C financing round in December with legendary venture firm Kleiner Perkins Caufield & Byers.

“Retailers are missing up to $500 billion in unrealized value for return or excess goods,” said Kleiner Perkins partner John Doerr, when the funding was disclosed. “This is big. Optoro’s proven cloud platform captures that value for retailers and consumer by efficiently finding new homes — not landfills — for returned goods.”

Other investors include Generation Investment Management, Revolution Growth, Grotech Ventures, and SWaN & Legend Ventures Partners.

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